Driving School Business Plan

Markam Driving School offers a wide range of services as outlined in the detailed sections below. It is ultimately the goal of the company to offer a one-stop facility for all driver needs, including registration, licensing, etc. In this way the company could offer greater perceived value for the customer that he or she could use for their entire driving career.

The industry is highly competitive with suppliers having a great deal of power in setting and negotiating the prices of their products and services to driving schools. In addition, because the customers see the service as undifferentiated and a “commodity” with little value separation between competitors, buyer power is also very high, Finally, the barriers to entry are moderately low, and the large number of competitors in this field, including substitutes (such as in house training at institutions like high schools), mean that the pricing for such services are very competitive. The only way to have an advantage in this industry is a low-cost leadership principal applied aggressively to all aspects of the business.

Markam Driving School hires trained and certified instructors who provide all the teaching services. In addition, the company has a fleet of ten cars (both manual and automatic transmission) and five computer simulators that are used to train clients. Each of these pieces of equipment are maintained regularly and are replaced every few years to keep up with technology and to provide a high quality look to the company.

The company is preparing plans to launch a new commercial drivers training program that will provide greater margins that the ordinary operators or driver improvement programs. In addition, the company is negotiating with the Washington state DOT to have an outreach office placed within our facilities to provide the one-stop driver “superstore” that management envisions.

3.1 Service Description

Markam Drivers School provides a wide range of state-certified courses and services. These include:

• Adult evening and noon classes for the busy working individual.
• High school programs for school districts that do not have their own in-house services.
• Street safe courses.
• Court approved defensive driving courses for those people looking to reduce traffic fines.
• Brush up courses.

Each course requires that the student purchase their own reading and studying material and can last up to five weeks for the beginner student. Other courses range from two to four weeks. Instructors are required to have certain hours of the week made available for student questions and issues.

3.2 Competitive Comparison

The driver education industry is highly competitive. Each company within this field has high capital costs, low margins, and a high intensity of competition.

 Suppliers have a great deal of power in setting and negotiating the prices of their products and services to driving schools. This is due to the fact that the suppliers who absorb the greatest amounts of cash from driving schools are large petroleum and auto manufacturer companies. These companies are more consolidated that the driving school industry, have deeper pockets, an almost limitless number of substitute customers, and finally they are the single most important supplier to MDS’s industry. Therefore, these companies can set whatever price they wish to. It has been MDS’s strategy to ease this issue by forming special partnerships with potential suppliers through symbiotic relationships and to seek new and unorthodox ways to acquire such supplies. For instance, the company now has an excellent relationship with Tesoro gasoline stations that provide us with a discount on all fuel purchased. In turn, we provide the company with an expanded avenue of marketing.

 In addition, because the customers see the service as undifferentiated and a “commodity” with little value separation between competitors, buyer power is also very high. Market research conducted between January and August 1996 has shown that although the quality and services of driver education companies can vary quite a bit, the customer does not perceive this as a serious issue when seeking driver education services. In fact there is still a significant portion of the population that learn from informal sources such as relatives. Additionally, the costs of our services are not cheap, and buyers are willing to search for the most favorable combination of price and acceptable service.

 The barriers to entry and exit are moderately low in this industry. Switching costs are virtually non-existent and the costs to entry and exist the market are low. However, the advantages of producing at high volume and reaping the benefits of economies of scale are quite attractive. Once MDS becomes a regional player, these economies of scale will work toward the company’s advantage.

The large number of competitors in this field, including substitutes such as in house training at institutions like high schools, mean that the pricing for such services are very competitive. The only way to have an advantage in this industry is a low-cost leadership principal applied aggressively to all aspects of the business.

3.3 Fulfillment

Markam Driving School hires trained and certified instructors who provide all the teaching services. In addition, the company has a fleet of ten cars (both manual and automatic transmission) and five computer simulators that are used to train clients. It is planned that each facility will have the same number and type of equipment. Each of these pieces of equipment are maintained regularly and are replaced every few years to keep up with technology and to provide a high-quality look to the company.

3.4 Technology

The technological revolution in computers has enhanced our abilities to teach. MDS has remained on the cutting edge by instituting the use of computer simulators and remote Web-accessed study material. The company will continue to seek new ways to provide a better and more convenient teaching environment through technology. The virtual class room is a thing of the near future, and we are positioning ourselves to be among the first who will provide such services.

3.5 Future Services

The company is in the process of launching a new division for the Seattle office that will encompass training classes for commercial drivers licenses and motorcycle licenses. These services will include comprehensive indoor training classes, job placement assistance for truck and bus drivers, and rented vehicles to practice with, and use for license testing. This program will be launched in 3rd quarter 2004. Depending on its success, management plans to incorporate this program into all the field offices by 3rd quarter 2005.

In addition, Markam Driving School is exploring the possibility of integrating a Washington state DMV outreach office within our facilities. Placed directly within our offices, this would offer a complete one-stop package for the customers who would be able to get licenses, registration, records and all other services a normal DMV could provide.